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Australian primary care policy in 2004: two tiers or one for Medicare?

Australian primary care policy in 2004: two tiers or one for Medicare? The recent primary care policy debate in Australia has centred on access to primary medical (general practice) services. In Australia, access is heavily influenced by Commonwealth Government patient rebates that provide incentives for general practitioners not to charge copayments to patients (bulk billing). A steady decline in key access indicators (bulk billing) has led the Howard Government to introduce a set of changes that move Medicare from a universal scheme, to one increasingly targeted at providing services to more disadvantaged Australians. In doing so, another scene in the story of the contest between universal health care and selective provision in Australia has been written. This paper explores the immediate antecedents and consequences of the changes and sets them in the broader context of policy development for primary care in Australia. grams and population health programs including health Introduction Primary health care and community care can be thought promotion. of as a set of health programs and services. Most discus- sions of the primary health and community care services Primary health and community care is the most visible sector suggest that it has the following characteristics: (1) and commonly used part of the health system. In 1999– It is the first point of contact with the health system. This 00 the Commonwealth provided approximately $6 bil- may occur through general practice, community health lion through the Commonwealth Medical Benefits and services, and pharmacies. There is also some overlap Pharmaceutical Benefits Schemes. States and Local Gov- between primary care and hospital emergency depart- ernment provided approximately $1.8 billion for 'com- ments, particularly for less complex and intensive presen- munity and public health' which includes allied health, tations. (2) Services are provided in community and counselling, nursing and a range of primary and second- ambulatory settings and at home. (3) There is an empha- ary prevention and health promotion programs. The sis on continuing relationships between service providers Commonwealth, through direct outlays ($6 million) and and consumers over extended periods of time. (4) Services private health insurance premium rebates ($97 million), have a more comprehensive and holistic approach. (5) also provided $103 million for dental services, with the There is an emphasis on early detection and illness pre- States and Territories contributing $305 million. This vention services such as maternal and child health pro- does not include the substantial funds committed to the Page 1 of 6 (page number not for citation purposes) Australia and New Zealand Health Policy 2004, 1:2 http://www.anzhealthpolicy.com/content/1/1/2 various forms of community support for people with dis- Bulk billing increased steadily from the introduction of abilities, chronic illness and mental illness [1]. Medicare in 1984/85 to approximately 70% in the mid- 1990s. Bulk-billing rates for GP services have generally Primary health and community care services face unique been about 10% higher than the overall bulk-billing rates challenges. Over the past three decades primary health over the last decade, reaching a plateau of about 80% in services have come under significant pressure to address a the mid-1990s. They declined significantly after 2000. more complex and diverse range of community needs. Average GP bulk billing fell to 68% by September 2003. GP bulk billing rates are now similar to the overall CMBS Deinstitutionalisation, the introduction of new health bulk billing rates for all services [2]. and information technologies, the increasing prevalence of chronic disease and more general social and economic As bulk billing rates declined, disquiet and concern about trends have had a significant impact on primary health access to medical services rose amongst stakeholder inter- and community support services. This has resulted in con- ests. More generally, the overall decline in bulk billing cerns about the equity, quality and efficiency of services came on top of considerable disparity in equity of access and programs. Arguably, there is a need for a national pri- between rural and urban settings. Bulk billing rates in mary health care policy in Australia. One that would inner city areas with high per capita GP ratios were 30% address system integration, care pathways and team prac- higher than those in rural settings with low per capita tice, work force development, payment arrangements, ratios. A number of remote rural areas had difficulty governance, performance management and accountabil- attracting any GPs at all. ity. However, current Commonwealth reforms are focused on important, but relatively, narrowly focused Analysis of the reasons for the decline in bulk billing and solutions to the decreasing affordability and access for the disparities between rural and metropolitan settings general medical services. This article focuses primarily on suggest a strong relationship between the supply of GPs the recent debate that surrounds this issue. and the capacity to charge copayments and the impor- tance of the steady decline in the relative value of Com- Recent Policy monwealth rebates for GP services over time. Medicare is a Commonwealth Government, tax funded, social insurance scheme that provides rebates for general There is considerable evidence that GPs manage demand (primary) and specialist medical services and optometry. for their services to maintain their income [3]. As the In Australia, it is the principal national program for ensur- number of GPs increased with introduction of Medicare, ing equitable access to primary medical services. Over the particularly in inner city areas, per capita utilisation of GP last two years there has been a fiercely contested debate services increased sharply. Average out of pocket costs for about the future of Medicare. patients fell as bulk billing increased. The Common- wealth effectively provided the 'floor price' for services in Medicare was introduced to provide universal access to areas of high supply and high competition leaving patient affordable medical care. Up until recently Medicare sim- throughput rates as the primary means for increasing rev- ply provided a rebate of 85% of the Commonwealth Gov- enue. Urban areas with greater levels of disadvantage had ernment determined schedule fee for medical and higher bulk billing rates and shorter consultation times. diagnostic services. Practitioners were free to charge In higher socio-economic status areas, where patients patients a copayment as well. Where they did not apply a have a greater capacity to pay, there were lower bulk bill- copayment, they could bill the Commonwealth for the ing rates and longer consultation times. rebate and receive bulk payments direct from the Com- monwealth for these services, thereby avoiding adminis- In the decade to 2003, changes to GP training, migration trative costs and delay. This payment method, which and demographic ageing lead to a stabilization and became known as bulk billing, ensured that services were decline in the supply of GP services. Over the same period, effectively free to the patient at the point of service. the relative value of Medicare rebate income for GP serv- ices fell by about 10 percent compared with average Medicare has been very successful, particularly for general weekly ordinary time earnings. A decline that was proba- practice services. It is strongly supported by the Australia bly even greater when compared to specialist incomes. In community because it provides affordable access to med- response, GPs began to experiment with price increases ical services. Despite historical resistance by the Australian (co-payments) to improve their relative incomes [4]. Medical Association, it has been widely supported by practitioners because it provides them with a universal, Interestingly, bulk billing rates in relatively under sup- simple and predictable revenue stream. plied rural settings remained relatively stable at about 50% of consultations. This is about the level of consulta- Page 2 of 6 (page number not for citation purposes) Australia and New Zealand Health Policy 2004, 1:2 http://www.anzhealthpolicy.com/content/1/1/2 tions one would expect people on low incomes, who are Private health insurers were to be able to offer insurance eligible for concessional welfare benefits, to use. A finding coverage for the cumulative cost of out-of-hospital medi- that suggests that patient capacity to pay sets a 'floor' bulk cal services over $1,000 for a family in a calendar year. billing rate at about this level [4]. This included costs above the scheduled fee across a range of out-of-hospital services, including GP and specialist It is worth noting that many of these effects were predict- consultations and diagnostic tests. The Commonwealth able from the reforms to General Practice introduced in estimated that insurance products for this coverage were the early 1990s. In particular, tight management of GP likely to cost around $50 per year for families, and the supply through changes to training programs and restric- 30% private health insurance rebate was to apply to these tions on overseas trained medical practitioners were intro- products. duced in order to reduce growth in aggregate Medicare expenditure. However, the reforms recognised that a The Government's package also included proposals to move away from fee for service payment would also be introduce additional medical school places, additional required in the longer term. To this end a Better Practice GP training places, additional nurses and allied health Program to pay GPs on a per capita basis was introduced. professionals in general practice, and measures for veter- ans. Over time, it was intended that a significant proportion of Medicare payments would be made by practice based, per The Fairer Medicare package resulted in considerable capita payments. Progressively this would have allowed a debate and criticism, much of which was considered by shift toward more comprehensive, integrated practice and the Senate Select Committee on Medicare [5]. In part the a greater focus on quality and preventive services. How- Committee concluded that: ever, while the supply of GPs was successfully con- strained, per capita payments remained a marginal  Equitable access to general practice services regardless of component of the payment system. income or geography is fundamental to good health care. In response to concerns about the fall in the bulk billing  GP income from bulk billing had not kept pace with rate, the Commonwealth Government proposed a "Fairer increases in average weekly ordinary time earnings and Medicare" package in April 2003. The package introduced this had contributed to declining bulk billing rates and a participating practice scheme. GP practices that agreed increased out of pocket charges. to charge a no gap fee to concessional patients were to be eligible for increased Medicare rebates for these patients.  Shortages in the supply of GPs are emerging as result of The level of the proposed increase for the rebate was $1 in compositional changes in the workforce, changes in prac- metropolitan city practices, $2.95 in non-metropolitan tice patterns and population ageing. city practices, $5.30 in rural centre practices, and $6.30 in outer rural and remote areas.  The Commonwealth's 'Fairer Medicare' proposals were inconsistent with the principles of Medicare. Participating practices were to continue to have the capac- ity to determine fees for non-concession cardholders,  The differential rebate payments for concessional including the option of bulk billing. However, if they patients were unnecessary because these patients were chose not to bulk bill these patients, they were to be able already largely receiving bulk billed services to charge the patient the co-payment and claim the Medi- care rebate direct from the Health Insurance Commission  The introduction of the new safety net arrangements cre- through HIC online billing facilities. Effectively, non-con- ates a two tier system of access to GP services cession cardholders were to be charged a gap payment thereby avoiding the transaction costs involved in claim- It became apparent that the Senate would not pass the leg- ing a rebate through the Medicare scheme themselves. islation required to enact the Commonwealth's package. Consequently, the Commonwealth presented its 'Medi- A new MBS safety net was to be available for those covered carePlus' extensions and revisions to the original proposal by concession cards with out-of-pocket costs greater than in November 2003 [6]. This package was passed by the $500 in a calendar year. Charges in excess of the sched- Australian Senate with the support of four independent uled fee were to be included, as were the costs of specialist Senators. and diagnostic services. Eighty per cent of out-of-pocket costs above the $500 threshold were to be met through The MedicarePlus proposals dropped the participating this safety net. practice scheme. Instead the Commonwealth proposed to increase the rebate for all concessional patients by $5 in Page 3 of 6 (page number not for citation purposes) Australia and New Zealand Health Policy 2004, 1:2 http://www.anzhealthpolicy.com/content/1/1/2 metropolitan areas and $7.50 in remote, rural and costs, it is therefore likely that bulk billing rates in metro- regional areas (including the State of Tasmania). The politan areas will continue to decline over time, until they increased rebate was also extended to children under 16. stabilise at around the level of services for concessional The safety net provisions were modified to provide an patients plus non concessional children under 16 (around 80% rebate for out of hospital medical costs for conces- 60% in metropolitan areas, assuming children under 16 sional patients and those whose income fell below speci- have average population consultation rates). fied tax thresholds after $300 of out of pocket expenses and after $700 for the remainder of the population. The proportion of children is highest in outer metropoli- tan regions and lowest in the inner city. Bulk billing rates Other aspects of the original proposal were largely have declined most in outer metropolitan areas. It is retained and extended. These included training places for therefore plausible that this measure will have the greatest GPs, medical graduates and nurses. Additionally, it was differential impact in outer metropolitan regions. proposed to introduce a Medicare Benefits Schedule item for nursing support in general practice and improved In rural settings, where there are GP shortages, the differ- internet access and online billing for GPs. MedicarePlus ential rebate (which is higher than in metropolitan set- also provides rebates for up to five allied health consulta- tings) could substantially increase GP incomes. However, tions delivered to patients with a chronic condition or GP supply factors ensure GPs have considerable capacity complex care needs, for and on behalf of a GP. Similarly, to increase copayments within the limits of patient capac- dental treatment care plans will be funded for these ity to pay. In general, bulk billing rates in rural settings are patients where they have significant dental problems that now at or below the consultation rate for concessional exacerbate their condition. The total estimated cost for patients. The new arrangements are therefore likely to pro- MedicarePlus to 2006/07 was estimated at $2.85 billion. tect bulk billing rate for concessional patients and are likely to see the rate increase to the level of concessional Policy Analysis consultations (around 55 – 60%). Initial reactions to the Commonwealth's proposals were mixed. A number of patient and provider groups have crit- The effect of differential rebates for non concessional chil- icized the new arrangements as undermining the principle dren under 16 on overall bulk billing rates is less clear in of universality that underpins Medicare. Criticisms have rural settings. With the increased rebate, there remains a also focused on the narrow focus of MedicarePlus on fees gap of approximately $5.50 between the new rebate and for general practitioners. the average patient billed service. As for metropolitan set- tings, there are no additional incentives to bulk bill other More specifically, MedicarePlus is likely to have differen- non concessional patients. Given the greater capacity to tial effects on affordability and access to GP services in charge copayments, this measure may be less successful in rural and metropolitan settings. In metropolitan settings, encouraging bulk billing than in metropolitan areas. the introduction of a $5 differential rebate for bulk billing concessional payments is sufficient to increase net GP The safety net provisions in MedicarePlus have significant incomes to about the AWOTE relativities that applied inflationary potential for out of hospital medical service prior to the decline in bulk billing. fees. Concessional patients and those who qualify for Family Tax Benefit A are eligible for an 80% rebate on out However, with current levels of bulk billing still at over of hospital costs once they incur $300 of out of pocket 65% in metropolitan areas, virtually all concessional costs. There is no cap on the rebate under the safety net. patients are already bulk billed. The proposal is therefore Average out of pocket costs for patient billed GP services subject to substantial dead weight loss. No incentives to are currently about $13. The safety net is therefore reached bulk bill non concessional patients (other than non con- in 20–25 consultations. The safety net provisions will be cessional children aged less than 16) are included. invoked more quickly when specialist medical practition- ers, diagnostic imaging services and pathology are In metropolitan areas, the gap between the average Medi- required. Average copayments are two or three times care rebate and the average patient billed service is around higher for specialist medical practitioners than for GPs. $13 for patients not covered by the differential rebate, compared to $8 for concessional patients and children Effectively, the introduction of the safety net removes con- under 16. Within system constraints, GP incomes are opti- straints on medical practitioners associated with concerns mized by bulk billing concessional patients and children about patient capacity to pay. This introduces moral haz- under 16 and charging copayments for other patients. ard for practitioners and consumers. Practitioners have Doing so also largely addresses patient capacity to pay incentives to increase their fees and provide more services issues. In the absence of major changes to supply or GP than necessary knowing the safety net will protect Page 4 of 6 (page number not for citation purposes) Australia and New Zealand Health Policy 2004, 1:2 http://www.anzhealthpolicy.com/content/1/1/2 patients. Patients have incentives to consume more serv- Setting aside the brief flirtation with a national commu- ices than are necessary because they are effectively insured nity health program for primary care, it established a uni- by the safety net. versal system of public hospital access through the States and a tax funded, social insurance scheme to underwrite However, the initial threshold and value of copayments equitable access to medical and related services. act as balancing disincentives for utilization. Clearly if the initial threshold and the copayments were less, the hazard Notwithstanding Howard Government claims of strong would be greater and vice versa. This trade off is likely to support for Medicare, the pendulum has now swung a impact differently depending on need, capacity to pay and considerable distance back toward the traditional Liberal/ supply factors. National Party preferred model. If history is a guide, now that the incentives to take out private health insurance For example, there may be paradoxical adverse effects for and the safety net is in place, the next steps are regulatory patients with significant ongoing health costs who are cur- mechanisms to exclude higher income earners from rently bulk billed because GPs and specialists have con- accessing publicly funded health services. cerns about their capacity to meet aggregate out of pocket costs over time. This is particularly true for aged pension While debates about access and equity are critical, they are recipients with chronic illness. With the introduction of only part of the overall picture. Recontesting the basic the safety net, the potential for incurring unmanageable access and equity principles of the health system every costs is significantly reduced and therefore bulk billing decade or so misses a number of important emerging rates for this group may decline. Whether effects like these issues. are experienced in practice will depend on factors such as the real value of GP rebates, patient need, capacity to pay, There is now emerging evidence that closer integration of GP supply and regulatory constraints. clinical decision-making and purchasing for enrolled populations in primary care settings through funds pool- Overall, the design features of the Howard Government ing and local agreements and contracts has the potential recent changes to Medicare are intended to, and will pro- to increase innovation, reduce costs and improve out- duce a two tier system. Access to primary medical services comes. These principles are being explored or actively for people on low incomes will be relatively well pro- implemented in a number of countries comparable to tected, but those above the income threshold will see a Australia, including the United Kingdom and New Zea- steady decline in bulk billing and an increase in out of land [8]. pocket costs for these services. Additionally, the poorly designed safety net will have inflationary consequences. There is clearly a need to reconsider the development of a national policy for primary health and community sup- Future Directions port services. Such a policy might include the following The policy and political contest around Medicare has an elements to address the issues which have been discussed extended pedigree. The conservative Liberal/National above: Party Coalition has long held the position that govern- ment should primarily provide health services for those  National primary health and community care goals and who are unable to provide for themselves and that those objectives. For example, these might broadly set out who are able to make their own way should do so, partic- equity, efficiency and quality criteria for the Australian ularly by taking out private health insurance. From this primary health and community support system. perspective the role of government is to provide an appro- priate regulatory environment, incentives and sanctions  National performance indicators. For example, these to take up private insurance and a targeted safety net for indicators could be used to report on and benchmark the the disadvantaged. Their preferred model was developed quality, access, efficiency and utilisation of the primary and refined in the 1950s and 1960s during the period of health and community support system and its impact on the Menzies Government and reintroduced in stages dur- acute, sub acute and residential care. ing the late 1970s and early 1980s by the Fraser Govern- ment [7].  Population based planning, allocation and monitoring. For example, funding allocation models and system gov- On the other hand, the Australian Labor Party has advo- ernance arrangements based on the health care needs of cated tax funded, universal access to publicly funded geographically defined residential populations (e.g. Divi- health care provided on the basis of need, rather than sions of General Practice, Area Health Authorities, Dis- capacity to pay. The Whitlam Government settled the tricts, Primary Care Partnerships) that promote continuity basic architecture of Labor's approach in the early 1970s. of care and service integration could be considered. Page 5 of 6 (page number not for citation purposes) Australia and New Zealand Health Policy 2004, 1:2 http://www.anzhealthpolicy.com/content/1/1/2  Coordinated service pathways for health issues and con- ditions. For example, consistent best practice models link- ing prevention, early intervention, primary care, acute care, rehabilitation and community support should be developed for all major chronic diseases, mental illness and alcohol and drug problems.  Payment systems. For example a program to develop integrated payment models and systems for primary and community support services could be established and linked to Commonwealth/State agreements (e.g. AHCAS, HACC) and own purpose funding streams. This might include consideration of capitated, case based, and con- tract funding to replace or compliment existing arrange- ments for primary care services.  National workforce planning and analysis for primary health and community support services.  A national evaluation, research and development pro- gram in primary health and community support services.  National planning and priority setting processes for pri- mary health and community care to ensure greater align- ment of Commonwealth and State priorities. References 1. Australian Institute of Health and Welfare: Health Expenditure Bulletin No.17, Australia's Health Services 1999–00. Canberra Australian Institute of Health and Welfare; 2001. 2. Australian Government Department of Health & Ageing (2004): Medi- care Statistics 2004 [http://www.health.gov.au/haf/medstats/ index.htm]. Canberra Australian Government Department of Health & Ageing 3. Richardson J, Peacock S: Supplier induced demand reconsidered. Working Paper 81 Melbourne: Centre for Health Program Evaluation; 1999. 4. Swerissen H, Duckett SJ, Livingstone C: An analysis of potential inflationary effects on health care costs for consumers asso- ciated with the Government's 'A fairer Medicare', and the Opposition proposal. A Report for the Department of the Senate, Canberra; 2003. 5. [http://www.aph.gov.au/Senate/committee/medicare_ctte/]. 6. [http://www.health.gov.au/internet/wcms/publishing.nsf/Content/ health-mediarel-yr2003-ta-abb086.htm ]. 7. Sax S: A Strife of interests: politics and policies in Australian Health Services. Sydney: Allen and Unwin; 1984. 8. Mays N, Syke S, Malbon G, Goodwin N: The purchasing of health care by primary care organizations. Buckingham Open Univer- sity; 2001. Publish with Bio Med Central and every scientist can read your work free of charge "BioMed Central will be the most significant development for disseminating the results of biomedical researc h in our lifetime." Sir Paul Nurse, Cancer Research UK Your research papers will be: available free of charge to the entire biomedical community peer reviewed and published immediately upon acceptance cited in PubMed and archived on PubMed Central yours — you keep the copyright BioMedcentral Submit your manuscript here: http://www.biomedcentral.com/info/publishing_adv.asp Page 6 of 6 (page number not for citation purposes) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Australia and New Zealand Health Policy Springer Journals

Australian primary care policy in 2004: two tiers or one for Medicare?

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Springer Journals
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Copyright © 2004 by Swerissen; licensee BioMed Central Ltd.
Subject
Medicine & Public Health; Public Health; Social Policy
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1743-8462
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10.1186/1743-8462-1-2
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Abstract

The recent primary care policy debate in Australia has centred on access to primary medical (general practice) services. In Australia, access is heavily influenced by Commonwealth Government patient rebates that provide incentives for general practitioners not to charge copayments to patients (bulk billing). A steady decline in key access indicators (bulk billing) has led the Howard Government to introduce a set of changes that move Medicare from a universal scheme, to one increasingly targeted at providing services to more disadvantaged Australians. In doing so, another scene in the story of the contest between universal health care and selective provision in Australia has been written. This paper explores the immediate antecedents and consequences of the changes and sets them in the broader context of policy development for primary care in Australia. grams and population health programs including health Introduction Primary health care and community care can be thought promotion. of as a set of health programs and services. Most discus- sions of the primary health and community care services Primary health and community care is the most visible sector suggest that it has the following characteristics: (1) and commonly used part of the health system. In 1999– It is the first point of contact with the health system. This 00 the Commonwealth provided approximately $6 bil- may occur through general practice, community health lion through the Commonwealth Medical Benefits and services, and pharmacies. There is also some overlap Pharmaceutical Benefits Schemes. States and Local Gov- between primary care and hospital emergency depart- ernment provided approximately $1.8 billion for 'com- ments, particularly for less complex and intensive presen- munity and public health' which includes allied health, tations. (2) Services are provided in community and counselling, nursing and a range of primary and second- ambulatory settings and at home. (3) There is an empha- ary prevention and health promotion programs. The sis on continuing relationships between service providers Commonwealth, through direct outlays ($6 million) and and consumers over extended periods of time. (4) Services private health insurance premium rebates ($97 million), have a more comprehensive and holistic approach. (5) also provided $103 million for dental services, with the There is an emphasis on early detection and illness pre- States and Territories contributing $305 million. This vention services such as maternal and child health pro- does not include the substantial funds committed to the Page 1 of 6 (page number not for citation purposes) Australia and New Zealand Health Policy 2004, 1:2 http://www.anzhealthpolicy.com/content/1/1/2 various forms of community support for people with dis- Bulk billing increased steadily from the introduction of abilities, chronic illness and mental illness [1]. Medicare in 1984/85 to approximately 70% in the mid- 1990s. Bulk-billing rates for GP services have generally Primary health and community care services face unique been about 10% higher than the overall bulk-billing rates challenges. Over the past three decades primary health over the last decade, reaching a plateau of about 80% in services have come under significant pressure to address a the mid-1990s. They declined significantly after 2000. more complex and diverse range of community needs. Average GP bulk billing fell to 68% by September 2003. GP bulk billing rates are now similar to the overall CMBS Deinstitutionalisation, the introduction of new health bulk billing rates for all services [2]. and information technologies, the increasing prevalence of chronic disease and more general social and economic As bulk billing rates declined, disquiet and concern about trends have had a significant impact on primary health access to medical services rose amongst stakeholder inter- and community support services. This has resulted in con- ests. More generally, the overall decline in bulk billing cerns about the equity, quality and efficiency of services came on top of considerable disparity in equity of access and programs. Arguably, there is a need for a national pri- between rural and urban settings. Bulk billing rates in mary health care policy in Australia. One that would inner city areas with high per capita GP ratios were 30% address system integration, care pathways and team prac- higher than those in rural settings with low per capita tice, work force development, payment arrangements, ratios. A number of remote rural areas had difficulty governance, performance management and accountabil- attracting any GPs at all. ity. However, current Commonwealth reforms are focused on important, but relatively, narrowly focused Analysis of the reasons for the decline in bulk billing and solutions to the decreasing affordability and access for the disparities between rural and metropolitan settings general medical services. This article focuses primarily on suggest a strong relationship between the supply of GPs the recent debate that surrounds this issue. and the capacity to charge copayments and the impor- tance of the steady decline in the relative value of Com- Recent Policy monwealth rebates for GP services over time. Medicare is a Commonwealth Government, tax funded, social insurance scheme that provides rebates for general There is considerable evidence that GPs manage demand (primary) and specialist medical services and optometry. for their services to maintain their income [3]. As the In Australia, it is the principal national program for ensur- number of GPs increased with introduction of Medicare, ing equitable access to primary medical services. Over the particularly in inner city areas, per capita utilisation of GP last two years there has been a fiercely contested debate services increased sharply. Average out of pocket costs for about the future of Medicare. patients fell as bulk billing increased. The Common- wealth effectively provided the 'floor price' for services in Medicare was introduced to provide universal access to areas of high supply and high competition leaving patient affordable medical care. Up until recently Medicare sim- throughput rates as the primary means for increasing rev- ply provided a rebate of 85% of the Commonwealth Gov- enue. Urban areas with greater levels of disadvantage had ernment determined schedule fee for medical and higher bulk billing rates and shorter consultation times. diagnostic services. Practitioners were free to charge In higher socio-economic status areas, where patients patients a copayment as well. Where they did not apply a have a greater capacity to pay, there were lower bulk bill- copayment, they could bill the Commonwealth for the ing rates and longer consultation times. rebate and receive bulk payments direct from the Com- monwealth for these services, thereby avoiding adminis- In the decade to 2003, changes to GP training, migration trative costs and delay. This payment method, which and demographic ageing lead to a stabilization and became known as bulk billing, ensured that services were decline in the supply of GP services. Over the same period, effectively free to the patient at the point of service. the relative value of Medicare rebate income for GP serv- ices fell by about 10 percent compared with average Medicare has been very successful, particularly for general weekly ordinary time earnings. A decline that was proba- practice services. It is strongly supported by the Australia bly even greater when compared to specialist incomes. In community because it provides affordable access to med- response, GPs began to experiment with price increases ical services. Despite historical resistance by the Australian (co-payments) to improve their relative incomes [4]. Medical Association, it has been widely supported by practitioners because it provides them with a universal, Interestingly, bulk billing rates in relatively under sup- simple and predictable revenue stream. plied rural settings remained relatively stable at about 50% of consultations. This is about the level of consulta- Page 2 of 6 (page number not for citation purposes) Australia and New Zealand Health Policy 2004, 1:2 http://www.anzhealthpolicy.com/content/1/1/2 tions one would expect people on low incomes, who are Private health insurers were to be able to offer insurance eligible for concessional welfare benefits, to use. A finding coverage for the cumulative cost of out-of-hospital medi- that suggests that patient capacity to pay sets a 'floor' bulk cal services over $1,000 for a family in a calendar year. billing rate at about this level [4]. This included costs above the scheduled fee across a range of out-of-hospital services, including GP and specialist It is worth noting that many of these effects were predict- consultations and diagnostic tests. The Commonwealth able from the reforms to General Practice introduced in estimated that insurance products for this coverage were the early 1990s. In particular, tight management of GP likely to cost around $50 per year for families, and the supply through changes to training programs and restric- 30% private health insurance rebate was to apply to these tions on overseas trained medical practitioners were intro- products. duced in order to reduce growth in aggregate Medicare expenditure. However, the reforms recognised that a The Government's package also included proposals to move away from fee for service payment would also be introduce additional medical school places, additional required in the longer term. To this end a Better Practice GP training places, additional nurses and allied health Program to pay GPs on a per capita basis was introduced. professionals in general practice, and measures for veter- ans. Over time, it was intended that a significant proportion of Medicare payments would be made by practice based, per The Fairer Medicare package resulted in considerable capita payments. Progressively this would have allowed a debate and criticism, much of which was considered by shift toward more comprehensive, integrated practice and the Senate Select Committee on Medicare [5]. In part the a greater focus on quality and preventive services. How- Committee concluded that: ever, while the supply of GPs was successfully con- strained, per capita payments remained a marginal  Equitable access to general practice services regardless of component of the payment system. income or geography is fundamental to good health care. In response to concerns about the fall in the bulk billing  GP income from bulk billing had not kept pace with rate, the Commonwealth Government proposed a "Fairer increases in average weekly ordinary time earnings and Medicare" package in April 2003. The package introduced this had contributed to declining bulk billing rates and a participating practice scheme. GP practices that agreed increased out of pocket charges. to charge a no gap fee to concessional patients were to be eligible for increased Medicare rebates for these patients.  Shortages in the supply of GPs are emerging as result of The level of the proposed increase for the rebate was $1 in compositional changes in the workforce, changes in prac- metropolitan city practices, $2.95 in non-metropolitan tice patterns and population ageing. city practices, $5.30 in rural centre practices, and $6.30 in outer rural and remote areas.  The Commonwealth's 'Fairer Medicare' proposals were inconsistent with the principles of Medicare. Participating practices were to continue to have the capac- ity to determine fees for non-concession cardholders,  The differential rebate payments for concessional including the option of bulk billing. However, if they patients were unnecessary because these patients were chose not to bulk bill these patients, they were to be able already largely receiving bulk billed services to charge the patient the co-payment and claim the Medi- care rebate direct from the Health Insurance Commission  The introduction of the new safety net arrangements cre- through HIC online billing facilities. Effectively, non-con- ates a two tier system of access to GP services cession cardholders were to be charged a gap payment thereby avoiding the transaction costs involved in claim- It became apparent that the Senate would not pass the leg- ing a rebate through the Medicare scheme themselves. islation required to enact the Commonwealth's package. Consequently, the Commonwealth presented its 'Medi- A new MBS safety net was to be available for those covered carePlus' extensions and revisions to the original proposal by concession cards with out-of-pocket costs greater than in November 2003 [6]. This package was passed by the $500 in a calendar year. Charges in excess of the sched- Australian Senate with the support of four independent uled fee were to be included, as were the costs of specialist Senators. and diagnostic services. Eighty per cent of out-of-pocket costs above the $500 threshold were to be met through The MedicarePlus proposals dropped the participating this safety net. practice scheme. Instead the Commonwealth proposed to increase the rebate for all concessional patients by $5 in Page 3 of 6 (page number not for citation purposes) Australia and New Zealand Health Policy 2004, 1:2 http://www.anzhealthpolicy.com/content/1/1/2 metropolitan areas and $7.50 in remote, rural and costs, it is therefore likely that bulk billing rates in metro- regional areas (including the State of Tasmania). The politan areas will continue to decline over time, until they increased rebate was also extended to children under 16. stabilise at around the level of services for concessional The safety net provisions were modified to provide an patients plus non concessional children under 16 (around 80% rebate for out of hospital medical costs for conces- 60% in metropolitan areas, assuming children under 16 sional patients and those whose income fell below speci- have average population consultation rates). fied tax thresholds after $300 of out of pocket expenses and after $700 for the remainder of the population. The proportion of children is highest in outer metropoli- tan regions and lowest in the inner city. Bulk billing rates Other aspects of the original proposal were largely have declined most in outer metropolitan areas. It is retained and extended. These included training places for therefore plausible that this measure will have the greatest GPs, medical graduates and nurses. Additionally, it was differential impact in outer metropolitan regions. proposed to introduce a Medicare Benefits Schedule item for nursing support in general practice and improved In rural settings, where there are GP shortages, the differ- internet access and online billing for GPs. MedicarePlus ential rebate (which is higher than in metropolitan set- also provides rebates for up to five allied health consulta- tings) could substantially increase GP incomes. However, tions delivered to patients with a chronic condition or GP supply factors ensure GPs have considerable capacity complex care needs, for and on behalf of a GP. Similarly, to increase copayments within the limits of patient capac- dental treatment care plans will be funded for these ity to pay. In general, bulk billing rates in rural settings are patients where they have significant dental problems that now at or below the consultation rate for concessional exacerbate their condition. The total estimated cost for patients. The new arrangements are therefore likely to pro- MedicarePlus to 2006/07 was estimated at $2.85 billion. tect bulk billing rate for concessional patients and are likely to see the rate increase to the level of concessional Policy Analysis consultations (around 55 – 60%). Initial reactions to the Commonwealth's proposals were mixed. A number of patient and provider groups have crit- The effect of differential rebates for non concessional chil- icized the new arrangements as undermining the principle dren under 16 on overall bulk billing rates is less clear in of universality that underpins Medicare. Criticisms have rural settings. With the increased rebate, there remains a also focused on the narrow focus of MedicarePlus on fees gap of approximately $5.50 between the new rebate and for general practitioners. the average patient billed service. As for metropolitan set- tings, there are no additional incentives to bulk bill other More specifically, MedicarePlus is likely to have differen- non concessional patients. Given the greater capacity to tial effects on affordability and access to GP services in charge copayments, this measure may be less successful in rural and metropolitan settings. In metropolitan settings, encouraging bulk billing than in metropolitan areas. the introduction of a $5 differential rebate for bulk billing concessional payments is sufficient to increase net GP The safety net provisions in MedicarePlus have significant incomes to about the AWOTE relativities that applied inflationary potential for out of hospital medical service prior to the decline in bulk billing. fees. Concessional patients and those who qualify for Family Tax Benefit A are eligible for an 80% rebate on out However, with current levels of bulk billing still at over of hospital costs once they incur $300 of out of pocket 65% in metropolitan areas, virtually all concessional costs. There is no cap on the rebate under the safety net. patients are already bulk billed. The proposal is therefore Average out of pocket costs for patient billed GP services subject to substantial dead weight loss. No incentives to are currently about $13. The safety net is therefore reached bulk bill non concessional patients (other than non con- in 20–25 consultations. The safety net provisions will be cessional children aged less than 16) are included. invoked more quickly when specialist medical practition- ers, diagnostic imaging services and pathology are In metropolitan areas, the gap between the average Medi- required. Average copayments are two or three times care rebate and the average patient billed service is around higher for specialist medical practitioners than for GPs. $13 for patients not covered by the differential rebate, compared to $8 for concessional patients and children Effectively, the introduction of the safety net removes con- under 16. Within system constraints, GP incomes are opti- straints on medical practitioners associated with concerns mized by bulk billing concessional patients and children about patient capacity to pay. This introduces moral haz- under 16 and charging copayments for other patients. ard for practitioners and consumers. Practitioners have Doing so also largely addresses patient capacity to pay incentives to increase their fees and provide more services issues. In the absence of major changes to supply or GP than necessary knowing the safety net will protect Page 4 of 6 (page number not for citation purposes) Australia and New Zealand Health Policy 2004, 1:2 http://www.anzhealthpolicy.com/content/1/1/2 patients. Patients have incentives to consume more serv- Setting aside the brief flirtation with a national commu- ices than are necessary because they are effectively insured nity health program for primary care, it established a uni- by the safety net. versal system of public hospital access through the States and a tax funded, social insurance scheme to underwrite However, the initial threshold and value of copayments equitable access to medical and related services. act as balancing disincentives for utilization. Clearly if the initial threshold and the copayments were less, the hazard Notwithstanding Howard Government claims of strong would be greater and vice versa. This trade off is likely to support for Medicare, the pendulum has now swung a impact differently depending on need, capacity to pay and considerable distance back toward the traditional Liberal/ supply factors. National Party preferred model. If history is a guide, now that the incentives to take out private health insurance For example, there may be paradoxical adverse effects for and the safety net is in place, the next steps are regulatory patients with significant ongoing health costs who are cur- mechanisms to exclude higher income earners from rently bulk billed because GPs and specialists have con- accessing publicly funded health services. cerns about their capacity to meet aggregate out of pocket costs over time. This is particularly true for aged pension While debates about access and equity are critical, they are recipients with chronic illness. With the introduction of only part of the overall picture. Recontesting the basic the safety net, the potential for incurring unmanageable access and equity principles of the health system every costs is significantly reduced and therefore bulk billing decade or so misses a number of important emerging rates for this group may decline. Whether effects like these issues. are experienced in practice will depend on factors such as the real value of GP rebates, patient need, capacity to pay, There is now emerging evidence that closer integration of GP supply and regulatory constraints. clinical decision-making and purchasing for enrolled populations in primary care settings through funds pool- Overall, the design features of the Howard Government ing and local agreements and contracts has the potential recent changes to Medicare are intended to, and will pro- to increase innovation, reduce costs and improve out- duce a two tier system. Access to primary medical services comes. These principles are being explored or actively for people on low incomes will be relatively well pro- implemented in a number of countries comparable to tected, but those above the income threshold will see a Australia, including the United Kingdom and New Zea- steady decline in bulk billing and an increase in out of land [8]. pocket costs for these services. Additionally, the poorly designed safety net will have inflationary consequences. There is clearly a need to reconsider the development of a national policy for primary health and community sup- Future Directions port services. Such a policy might include the following The policy and political contest around Medicare has an elements to address the issues which have been discussed extended pedigree. The conservative Liberal/National above: Party Coalition has long held the position that govern- ment should primarily provide health services for those  National primary health and community care goals and who are unable to provide for themselves and that those objectives. For example, these might broadly set out who are able to make their own way should do so, partic- equity, efficiency and quality criteria for the Australian ularly by taking out private health insurance. From this primary health and community support system. perspective the role of government is to provide an appro- priate regulatory environment, incentives and sanctions  National performance indicators. For example, these to take up private insurance and a targeted safety net for indicators could be used to report on and benchmark the the disadvantaged. Their preferred model was developed quality, access, efficiency and utilisation of the primary and refined in the 1950s and 1960s during the period of health and community support system and its impact on the Menzies Government and reintroduced in stages dur- acute, sub acute and residential care. ing the late 1970s and early 1980s by the Fraser Govern- ment [7].  Population based planning, allocation and monitoring. For example, funding allocation models and system gov- On the other hand, the Australian Labor Party has advo- ernance arrangements based on the health care needs of cated tax funded, universal access to publicly funded geographically defined residential populations (e.g. Divi- health care provided on the basis of need, rather than sions of General Practice, Area Health Authorities, Dis- capacity to pay. The Whitlam Government settled the tricts, Primary Care Partnerships) that promote continuity basic architecture of Labor's approach in the early 1970s. of care and service integration could be considered. Page 5 of 6 (page number not for citation purposes) Australia and New Zealand Health Policy 2004, 1:2 http://www.anzhealthpolicy.com/content/1/1/2  Coordinated service pathways for health issues and con- ditions. For example, consistent best practice models link- ing prevention, early intervention, primary care, acute care, rehabilitation and community support should be developed for all major chronic diseases, mental illness and alcohol and drug problems.  Payment systems. For example a program to develop integrated payment models and systems for primary and community support services could be established and linked to Commonwealth/State agreements (e.g. AHCAS, HACC) and own purpose funding streams. This might include consideration of capitated, case based, and con- tract funding to replace or compliment existing arrange- ments for primary care services.  National workforce planning and analysis for primary health and community support services.  A national evaluation, research and development pro- gram in primary health and community support services.  National planning and priority setting processes for pri- mary health and community care to ensure greater align- ment of Commonwealth and State priorities. References 1. Australian Institute of Health and Welfare: Health Expenditure Bulletin No.17, Australia's Health Services 1999–00. Canberra Australian Institute of Health and Welfare; 2001. 2. Australian Government Department of Health & Ageing (2004): Medi- care Statistics 2004 [http://www.health.gov.au/haf/medstats/ index.htm]. Canberra Australian Government Department of Health & Ageing 3. Richardson J, Peacock S: Supplier induced demand reconsidered. Working Paper 81 Melbourne: Centre for Health Program Evaluation; 1999. 4. Swerissen H, Duckett SJ, Livingstone C: An analysis of potential inflationary effects on health care costs for consumers asso- ciated with the Government's 'A fairer Medicare', and the Opposition proposal. A Report for the Department of the Senate, Canberra; 2003. 5. [http://www.aph.gov.au/Senate/committee/medicare_ctte/]. 6. [http://www.health.gov.au/internet/wcms/publishing.nsf/Content/ health-mediarel-yr2003-ta-abb086.htm ]. 7. Sax S: A Strife of interests: politics and policies in Australian Health Services. Sydney: Allen and Unwin; 1984. 8. Mays N, Syke S, Malbon G, Goodwin N: The purchasing of health care by primary care organizations. Buckingham Open Univer- sity; 2001. Publish with Bio Med Central and every scientist can read your work free of charge "BioMed Central will be the most significant development for disseminating the results of biomedical researc h in our lifetime." Sir Paul Nurse, Cancer Research UK Your research papers will be: available free of charge to the entire biomedical community peer reviewed and published immediately upon acceptance cited in PubMed and archived on PubMed Central yours — you keep the copyright BioMedcentral Submit your manuscript here: http://www.biomedcentral.com/info/publishing_adv.asp Page 6 of 6 (page number not for citation purposes)

Journal

Australia and New Zealand Health Policy – Springer Journals

Published: Nov 17, 2004

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